Mr. China Comes to America

For decades, every trend in manufacturing favored the developing world and worked against the United States. But new tools that greatly speed up development from idea to finished product encourage start-up companies to locate here, not in Asia. Could global trade winds finally be blowing toward America again?

“Most of the companies that are here would argue that, while they are not super-duper high-tech, they are all absolutely connected to the design prowess and skilled craftworks in the city,” Kate Sofis, the executive director of SFMade, told me. The most obvious example is apparel. Like New York, Chicago, Cleveland, and Los Angeles in their periods of fastest manufacturing expansion, San Francisco has attracted a large and diverse immigrant population. “The Latino and Asian communities have a high level of apparel skills,” Sofis said. “A young designer might have high design skills but not the technical ability to realize it.” Going to Asia for production would be too slow; finding the skills elsewhere in the U.S. would be too hard. Carrying out all operations locally has allowed many SFMade companies to offer quick “mass customization”: Rather than buying off the rack, a customer can choose personalized clothing, accessories, furnishings, or furniture, mainly online. Then small factories produce the goods locally, faster than they could come from overseas. I spoke with Sofis just before she headed to a conference of the Urban Manufacturing Alliance, which promotes manufacturing in 15 other cites, from Boston and New York to Detroit and Atlanta.

I first learned of SFMade two years ago, via DODOcase, a member that is one of the city’s start-up success stories. I had bought one of the company’s iPad covers as soon as it came onto the market, because I was drawn to its distinctive retro-futuristic design. Inside, the case contains an iPad or other electronic reader. Outside, it looks like an antique leather-bound book. A bamboo frame holds the electronic tablet in place and also strangely recalls the look of the page edges of a physical book.

“Back in 2010, we saw an opportunity present itself, if we could move quickly enough,” Craig Dalton, a veteran of tech start-ups who is now in his early 40s, told me in explaining the company’s history. I liked that he said “back in 2010” so matter-of-factly. The opportunity that 2010 brought was the launch of the first iPad. Liam Casey got his start making accessories for the popular electronic devices of 15 years ago. Dalton and his business partner, Patrick Buckley, did not know Casey’s story, but they saw a parallel chance.

To “design the product, and launch, and fulfill orders within one month—that meant that outsourcing to China was not ever a feasible option,” says Craig Dalton, a veteran of tech start-ups.

“The Kindle and other e-readers were already getting noticed,” Dalton told me. “The writing was on the wall, you could say, that there was going to be this shift from ink and paper to electronics as the way people consumed information. We felt there was an opportunity to connect people to the physical experience of picking up a book, and to the soon-to-be-dying craft of bookbinding.” Buckley, who is in his early 30s, had trained as a mechanical engineer at MIT and worked in laser physics at Lawrence Livermore National Laboratory, and had grown up with several relatives who worked in New York’s publishing industry.

He and Dalton felt they had to act fast, he told me, to get their product noticed in a field that was sure to fill up quickly. “We knew it was a very small window, and we needed to have a finished product quickly,” he said. “To figure out all the things we needed to do, and design the product, and launch, and fulfill orders within one month—that meant that outsourcing to China was not ever a feasible option.”

When he asked friends at Levi’s, Buckley said, they told him that nine months would be a reasonable timeline to take a product from concept to delivery. “We had to do it in a couple of weeks. Nimbleness like this would be impossible with a longer supply chain.” The partners drew on local woodworking and bookbinding talent. “The resources are still here, much atrophied, but in pockets,” Buckley said. San Francisco has a long tradition of fine printing. Dalton and Buckley bought large, heavy bindery machines from printing houses and brought them into their factory.

DODOcase is a niche success, to be sure. But it has grown to 30-plus employees in two years, with 30 percent of its sales outside the United States, and its founders have broad ambitions. “If you look at brands like Levi’s and Gap and North Face that had their beginnings here in S.F., you see that a small boutique idea can grow into a global brand,” Buckley said. “It is very hard to tell ahead of time which ones will make it, but we hope to become a lifestyle brand with the recognition and scale of a Gap.”

I have learned to imagine the possibility of rapid growth. I first interviewed the founders of Google when the company had 20 employees, versus today’s 30,000, and visited Apple three years after its founding, when it had a few hundred employees rather than today’s 60,000. Big things start small.

Mr. China Comes to America

The medium-tech start-ups of SFMade (and its counterparts) are working out a strategy that combines quick response, local skills, and a global marketplace to foster manufacturing in U.S. cities. Liam Casey’s new investments in the Bay Area are designed to apply a similar model for companies several steps up the technology ladder. The purchase of Lime Lab and the opening of what he sees as an academy of high-speed manufacturing in the city could combine to bring to U.S.-based entrepreneurs, inventors, designers, and smaller companies some of the advantages now unique to Apple and a handful of other globally integrated firms—and with a greater probability than Apple’s of creating jobs in the United States.

The heart of those advantages is, again, connecting the sequential stages of the manufacturing cycle as a whole. The process naturally starts with the idea for a product. Whether the idea is practical depends crucially on how it is realized in industrial design; whether that design makes for an efficient or impractical factory experience depends on how well it is matched to process-engineering on the shop floor. Even after production begins, the design is often refined and the manufacturing process rejiggered based on real-world experience.

The closer this linkage, the faster and more efficiently an idea can be converted to tangible, marketable reality. The more evolved and responsive the feedback loop, the more precisely an organization will be able to distinguish promising projects from impractical ones. Apple has this capacity; it has teams on more or less permanent assignment to southern China to match its designers’ goals to the realities of the shop floor. But for the first time in decades, new tools are making it possible to develop this capacity for U.S. manufacturing. This means greater prospects for American innovators to convert their ideas into products—and jobs. That is what’s new, and promising. As one entrepreneur told me, asking not to be named for fear of irritating the mighty Apple, “What Apple has, internally, will now be available to smaller companies.”

In specific terms, the service that Lime Lab and a growing number of design firms can offer is a “quick iteration” way of deciding which ideas will be most practical for manufacturing. “Over the past couple of years, people have gotten used to the idea of rapid iteration in social-media firms,” Linus Chung told me. “You iterate and adapt quickly based on consumer demand. You learn to ‘fail fast.’ We’re bringing that to the hardware space.” As an illustration, he mentioned a start-up called Lark, which makes electronic sleep- and fitness-monitoring devices that are part of the broader trend toward precise, individualized indicators of health that Mark Bowden discussed recently in “The Measured Man” (July/August 2012). Lark was founded two years ago, while the overall economy was still reeling, by a Stanford-trained entrepreneur named Julia Hu. Many of its products, the latest of which is a $149.99 wristband that monitors your sleep, exercise, calorie-burning, and even degree of hydration, are now carried at Apple stores and by Best Buy and Brookstone. The electronics in this wristband are assembled in China, as are nearly all of the world’s electronics. But more of the total job growth in the company’s rise, including engineering and design work, has been in the United States than would have been the case even way back in 2009. “They started with five people, and now they have 30,” Chung, who has worked with Lark, told me. “For a company their size, you’d expect they’d need half those people in China. Now that entire team is one office in the United States.”

Fifteen additional employees here, a new urban start-up there—these are obviously not the sole answers to America’s reindustrialization. The growth of this sort of activity depends on large-scale policies: continued national investment in high technology; education to train the next generation of engineers and craftsmen; negotiations to open up markets (and protect intellectual property) around the world. The politically controversial, but right, decision to keep General Motors operating saved hundreds of thousands of manufacturing jobs from being needlessly lost.

But developments like these are an important part of the solution. Any account of a region’s growth or decline at any stage of our economic history has indicated promise when the region is full of people optimistically starting small ventures, and decline when it is not. “The real key to long-term value creation is that ongoing string of new companies,” Liam Casey told me this year, in New York, after he had met with people considering start-ups there. “That’s where you create the next wave of value, and new jobs.” American culture has long been favorable to the start-up, and the United States has captured a disproportionate share of the profits from their innovations. Shifts in technology may soon allow us to capture more of the jobs.

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James Fallows is an Atlantic national correspondent. His latest book, China Airborne, was published in May. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

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